India’s merchandise exports rose sharply in September, belying fears of a slump due to disruption and working capital issues brought on by the introduction of the goods and services tax. Exports climbed 25.67 per cent in September, exceeding an 18.1 per cent increase in imports, helping to narrow the trade deficit to $8.98 billion from $9.07 billion in September 2016.
In absolute terms, India’s exports were pegged at $28.6 billion dollars in September against $22.8 billion a year ago, according to data released by the Commerce Department recently. Imports were up at $37.6 billion from $31.8 billion.
"We’re doing our best to remove all hurdles in the way of exporters, so that they focus on their core business of exports and we do the rest," said Commerce and Industry Minister Shri Suresh Prabhu. "Many more initiatives are in works to help exporters," he added.
"Continued improvement in the pace of growth of merchandise exports, as well as its fairly broad-based nature, suggest that concerns that arose after the transition to GST may be receding in some sectors," said Ms. Aditi Nayar, Principal Economist at ICRA.
There were apprehensions that exports would take a hit because of GST, which was rolled out on July 1, with refunds getting blocked.
The Government has already eased GST rules for exporters to reduce transition pains and speed up refunds. "In continuation with positive growth exhibited by exports for the last 13 months, exports during September 2017 have shown growth of 25.67 per cent in dollar terms," the Ministry said in a statement.
"We need to see if the trend continues for the next quarter and whether this growth trend will be maintained... GST has not had much impact on the export numbers and going forward, with many gaps addressed by the Government, the result should be positive," said Mr. Madan Sabnavis, Chief Economist at CARE Ratings.
In rupee terms, both exports and imports grew at a slower pace – 21.3 per cent and 14 per cent respectively – from a year ago, showing the impact of the sharp appreciation of the rupee over this period. The increase in exports was driven by a broad-based performance, with 26 of 30 categories posting positive growth.
Outbound shipments of engineering goods grew 44.2 per cent, chemicals (46 per cent), petroleum products (39.7 per cent), pharmaceuticals (14.7 per cent), readymade garments (29.4 per cent) and gems and jewellery (7.1 per cent).
Gold imports moderated to $1.7 billion from $1.8 billion in September last year.
"In our view, build-up of substantial stocks over the last few months would ease the volume of gold imports during the festive and wedding season," said Nayar.
Higher exports will support India’s economy, which expanded 5.7 per cent in the April-June quarter, a three-year low. Part of the increase in both exports and imports was because of the rise in commodity prices. Oil and non-oil imports grew 18.5 per cent and 18 per cent to $8.18 billion and $29.4 billion, respectively.
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